Cyprus charges Capital Gains Tax (CGT) at a flat 20%, but the striking feature of the regime is how narrow it is. CGT applies only to gains on immovable property situated in Cyprus, and to gains on shares in companies that own such property. Ordinary securities gains, movable assets and real estate outside Cyprus fall outside this CGT charge, but shares linked to Cyprus immovable property require the specific property-rich analysis. For most investors and company owners, that means no Cyprus CGT at all.
This guide explains exactly what the 20% applies to, the 2026 anti-avoidance extension to "property-rich" shares, the lifetime exemptions that the reform increased, how the taxable gain is computed (including the all-important inflation adjustment), and the wide range of transfers that are exempt. If your disposal involves Cyprus land or buildings — directly or through a company — this is the tax to understand. For the broader picture of property ownership costs, read alongside our Cyprus property tax guide and, if you let the property, our rental income tax guide — and for landlords specifically, our accounting and tax service for landlords in Cyprus.
What CGT actually applies to
CGT at 20% is charged on gains from the disposal of Cyprus immovable property and from disposing of shares in unlisted companies that own such property — nothing else. The charge follows the location of the property, not the residence of the seller. Specifically, it applies to gains from:
- the disposal of immovable property situated in Cyprus (land and buildings);
- the disposal of shares in companies that own Cyprus immovable property, where the shares are not listed on a recognised stock exchange; and
- from 2026, the disposal of shares that derive their value indirectly from Cyprus immovable property above the new threshold (see below).
What is not caught is just as important. Ordinary gains on the disposal of securities — shares, bonds, debentures and qualifying fund units — are generally outside CGT, subject to the Cyprus property-rich share rules. Whether a gain is taxed as trading income is a separate fact-specific question. Gains on immovable property outside Cyprus are not within Cyprus CGT. And gains realised by a person who is taxed on the disposal as trading income are dealt with under income tax instead. This deliberate narrowness is one reason Cyprus is attractive for investment and holding structures — explored further in our holding company guide.
It is worth being clear about the difference between an investment disposal and a trading one. A person who buys and sells land as a business — for example a developer turning over plots — may be assessed to income tax on the profit as trading income rather than to CGT on a capital gain. The line between the two is a question of fact, looking at frequency of transactions, the holding period, the financing and the seller's intention at acquisition. Where the disposal is genuinely of a capital asset, CGT is the relevant charge; where it is part of a trade, the gain is ordinary business income taxed under the income tax rules instead.
Immovable property situated in Cyprus means land and buildings located in the Republic, together with rights over them. CGT follows the location of the property, not the residence of the seller — so a non-resident selling a Cyprus apartment is within the charge, while a Cyprus resident selling a London flat is not.
The 2026 "property-rich" extension
The 2026 reform widened CGT to catch property sold indirectly through companies, lowering the "property-rich" threshold from 50% to 20%. To stop property being sold tax-free through a chain of holding companies, the reform reduced the proportion of value at which shares are treated as property-rich. Previously, shares were caught only where they derived more than 50% of their value from Cyprus immovable property; from 2026 the threshold is 20%. In other words, if 20% or more of the value of the shares you are selling is attributable to Cyprus property, the gain on that property element is within CGT — even where the property is held several layers down a structure.
The rate on these disposals is still 20%; the change is to the scope of what is caught, not the rate. There is also an anti-undervaluation safeguard, so the consideration on an indirect disposal is tested against the underlying fair market value of the property. If you hold Cyprus real estate inside a company or group, factor this into any sale or reorganisation — our tax advisory team can model the position before you transact.
The lifetime exemptions (increased for 2026)
Individuals deduct lifetime exemptions from the chargeable gain — up to €150,000 for a primary residence — and the 2026 reform substantially increased them. These are lifetime limits, not allowances renewed each year or automatically added together on one sale. Check the conditions and any amount used in earlier disposals before applying them to the gain:
| Type of disposal | Old exemption | 2026 exemption |
|---|---|---|
| Private / primary residence (conditions apply) | €85,430 | €150,000 |
| Agricultural land (by a farmer) | €25,629 | €50,000 |
| Any other disposal (general) | €17,086 | €30,000 |
These are lifetime allowances, not annual ones, and they are cumulative: a person who has used part of the general €30,000 exemption has that much less to set against a future gain. The €150,000 residence exemption is the most valuable and is subject to conditions about ownership and use of the home — broadly, that it has been used as the owner's main residence for a qualifying period. Where a person qualifies for more than one, the residence exemption is the overall ceiling rather than an amount added on top of the others. Because the allowance can only be spent once, the order and timing of disposals over a lifetime can materially change the tax due.
How the taxable gain is computed
The chargeable gain is the disposal proceeds less the indexed cost of the asset and certain allowable expenses. A defining feature of Cyprus CGT is that the cost is adjusted for inflation: the original cost (and the cost of improvements) is increased in line with the Cyprus consumer price index from the date of acquisition to the date of disposal, which reduces the gain and recognises that part of any "profit" is simply inflation. Without indexation, an owner who held property through decades of rising prices would be taxed on purely nominal growth.
The deductions fall into clear categories. The table below summarises what reduces the gain:
| Allowable deduction | What it covers | Indexed? |
|---|---|---|
| Acquisition cost | Original purchase price, or 1 January 1980 value if owned before then | Yes |
| Cost of improvements | Capital additions and enhancements to the property | Yes |
| Interest on acquisition loans | Finance costs of loans taken to buy the property | No |
| Transfer fees and legal expenses | Land Registry transfer fees, legal and professional costs of acquisition and disposal | No |
| Estate-agent commission | Selling costs paid to an agent on disposal | No |
For property owned before 1980, the base cost is the value at 1 January 1980 as recorded by the Department of Lands and Surveys, again indexed forward to the date of disposal. Keeping documentary evidence of every cost — invoices for improvements, the loan agreement, completion statements — is what makes these deductions stand up if the Tax Department reviews the computation.
An individual sells a Cyprus property for €400,000. The indexed acquisition cost is €260,000, improvements (indexed) add €20,000, and transfer and legal costs are €10,000 — total deductions of €290,000. The gain is €110,000. Applying the general lifetime exemption of €30,000 (assuming it is unused) leaves a chargeable gain of €80,000, taxed at 20% = €16,000. Had the same property qualified as the seller's primary residence, the €150,000 exemption would have covered the entire €110,000 gain, reducing the CGT to nil. Figures are illustrative; the indexation depends on the actual dates and published index. Try our capital gains tax calculator.
Transfers that are exempt
A wide range of disposals are exempt from CGT altogether — chiefly family gifts, qualifying reorganisations and transfers on death — which is why careful structuring of family and corporate transfers matters:
- Gifts between spouses, and gifts to relatives up to the third degree of kindred;
- Gifts to a family company, where the shareholders are and remain members of the donor's family;
- Gifts to charities and to the Republic of Cyprus;
- Company reorganisations (mergers, divisions and transfers of assets) that meet the conditions;
- Expropriations and certain exchanges of property; and
- gains arising on the death of the owner (Cyprus has no inheritance tax).
Cyprus abolished inheritance tax in 2000, and there is no wealth tax. Combined with the CGT exemptions for family gifts and transfers on death, this makes intergenerational transfer of Cyprus property relatively efficient — but the conditions for each exemption must be met precisely, so document the relationship and the basis of the exemption at the time of the transfer.
Filing, payment and the disposal process
CGT is assessed and collected by the Cyprus Tax Department, and in practice the transfer of property cannot complete cleanly at the Land Registry until the position is settled. The seller submits the gain computation to the Tax Department, which issues an assessment; the tax is then paid before the Department of Lands and Surveys registers the transfer into the buyer's name. Because indexation and the exemptions can move the figure significantly, it is worth preparing the computation early rather than at the closing table.
This is also where good record-keeping pays off: the Tax Department will look for evidence of the acquisition cost, the dates that drive indexation, and any improvement spend you are claiming. Where the disposal is of company shares rather than the property itself, the property-rich test and a valuation of the underlying real estate come into play, which usually calls for professional input well before the sale is signed.
A few practical points recur in real disposals. Co-owners are each assessed on their own share of the gain and can each apply their own lifetime exemption, which can make a jointly owned family home considerably more efficient than the headline figures suggest. The 20% rate is flat, so unlike income tax there is no benefit in spreading a single gain across years — but the one-off nature of the lifetime exemptions means that the sequence of disposals over time can matter a great deal. And because the residence exemption is conditional on genuine use of the property as a main home, the facts should be capable of being evidenced if questioned. None of this is a substitute for a computation on your actual numbers; treat the figures here as illustrative of how the regime works rather than as advice on a specific sale.
Selling Cyprus property the right way
The headline is reassuring: most disposals — securities, foreign property, and many family transfers — attract no Cyprus CGT, and where CGT does apply the inflation adjustment and the increased lifetime exemptions soften it considerably. But the 2026 property-rich extension, the conditions on the residence exemption, and the mechanics of indexation all reward getting advice before you sign. The 2026 reform package is summarised in our Cyprus tax reform guide.
If you are selling Cyprus property, transferring it within the family, or restructuring a company that owns real estate, talk to us first. Our tax advisory service will compute the gain, apply every exemption you are entitled to, and make sure the disposal is structured efficiently and correctly.